Practical Construction Management

R. H. B. Ranns, E. J. M. Ranns

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9780415362573
• eBook ISBN: 9781134230754
• Topic: Architecture
• Subtopic: Architecture General

Filled with practical advice for all aspects of the construction manager's role, this invaluable book fills a need for training in this essential subject, to ensure greater efficiency on site and smoother client-contractor relations.

Developed as a handy-reference guide for practitioners and also useful for students, it covers the broad range of responsibilities associated with the role, providing clear guidance and in-depth coverage of the essentials. Topics include financial responsibilities and how to handle them, tender preparation, people management, health and safety, contracts, subcontracting, measurement and quantities, insurance and risk and many more simple and effective methods for turning construction projects into reality.

Chapter 1 Background

DOI: 10.4324/9780203012901-2

1.1 The Purpose of the Book

This handbook is aimed at Construction Managers and therefore aims to provide the reader with a guide to the actions necessary for the Site Team once a contract has been entered into.

It does not dwell on whether a particular form of contract or method of construction is preferable because this has generally been decided by the Employer before the contract was entered into. The key objectives are therefore:

• how to control costs both in terms of utilisation of resource and continuous monitoring of financial outcome;
• how to understand and enforce the bargain that has been made with the Employer or Client;
• how to make the bargain with a Subcontractor and then hold them to it:
• how to plan the crucial start up of a project;
• how to control quality;
• how to comply with regulations.

The emphasis on enforcement of the bargains made, otherwise known as Contracts, at first sight seems confrontational in the current climate for improved relations and the buzz words of teambuilding and partnering and hence it is as well to review current developments and set the detail in context.

1.2 Developments and the Direction of Change in the Industry

There have been many initiatives worldwide to improve productivity and reduce construction times. In the UK there have been two major reviews which can be summarised and set in context as follows.

The first was “Constructing the Team” in 1994 lead by Sir Michael Latham which still holds important messages for the industry in terms of developing Best Practice through promoting the search for:

• value for money;
• better productivity;
• better competitiveness of the industry.

Latham recognised that contractual relationships were impeding progress towards these aims and laid down a series of 13 principles that he maintained should be present in all construction contracts.

These were as follows:

1. A specific duty for all parties to deal fairly with each other, and with their subcontractors, specialists and suppliers, in an atmosphere of mutual co-operation.
2. Firm duties of teamwork, with shared financial motivation to pursue those objectives. These should involve a general presumption to achieve “win-win” solutions to problems which may arise during the course of the project.
3. A wholly interrelated package of documents which clearly defines the roles and duties of all involved, and which is suitable for all types of project and for any procurement route.
4. Easily comprehensible language and with guidance notes attached.
5. Separation of the roles of contract administrator, project or lead manager and adjudicator. The project or lead manager should be clearly defined as client’s representative.
6. A choice of allocation of risks, to be decided as appropriate to each project but then allocated to the party best able to manage, estimate and carry the risk.
7. Taking all reasonable steps to avoid changes to pre-planned works information. But, where variations do occur, they should be priced in advance, with provision for independent adjudication if agreement cannot be reached.
8. Express provision for assessing interim payments by methods other than monthly valuation, i.e. milestones, activity schedules or payment schedules. Such arrangements must also be reflected in the related subcontract documentation. The eventual aim should be to phase out the traditional system of monthly measurement or remeasurement but meanwhile provision should still be made for it.
9. Clearly setting out the period within which interim payments must be made to all participants in the process, failing which they will have an automatic right to compensation, involving payment of interest at a sufficiently heavy rate to deter slow payment.
10. Providing for secure trust fund routes of payment.
11. While taking all possible steps to avoid conflict on site, providing for speedy dispute resolution if any conflict arises, by a predetermined impartial adjudicator /referee/ expert.
12. Providing for incentives for exceptional performance.
13. Making provision where appropriate for advance mobilisation payments (if necessary, bonded) to contractors and subcontractors, including payments in respect of off-site prefabricated materials provided by part of the construction team.

Only the NEC contract came close to these aims and the second edition 1995 (also called the ECC) was brought out to achieve all these objectives. Needless to say, having commissioned the report the NEC contract is still not the Government’s usual contract when it undertakes major projects.

The next significant event was on the international stage, being the introduction of ISO 9000 in 1996 relating to Quality Management (see Chapter 12) which codified methods for providing continuous improvement in Quality Management.

The next UK Government-sponsored initiative was “Rethinking Construction” in 1998 lead by Sir John Egan. This built on the 1994 Latham Report and the ideas within ISO 9000 and took them further, clearly defining areas for improvements and making specific recommendations.

The practical goal set by Egan was:

“Our targets are based on our own experience and evidence that we have obtained from projects in the UK and overseas. Our targets include annual reductions of 10% in construction cost and construction time. We also propose that defects in projects should be reduced by 20% per year”

The five key “Drivers of change” identified as essential elements in achieving these goals were:

1. Committed leadership.
2. A focus on the customer.
3. Integrated processes and teams.
4. A quality driver agenda.
5. A commitment to people.

These objectives are settled at Board level and govern the way in which Clients seek to have facilities constructed and a contracting company seeks to do business and enter into contracts. The proposed drivers for change are not something which can be expected to alter contracts once they are let and are not in the province of everyday construction managers.

This is not the case with the series of techniques which were proposed to facilitate the recommendations that are appearing in one form or other in many projects.

1. Value Management: eliminating waste from the brief and ultimately the design.
2. Benchmarking: understanding and measuring performance. Setting improvement targets.
3. Cultural changes: principles of “zero defects”.
4. Integrated processes: Utilising the full skills of the construction team to deliver value to the client.
5. Product development: a commitment to develop a generic product by innovation to meet and exceed the needs of the client.
6. Project implementation: develop the generic product into a specific project or site.
7. Partnering the supply: driving innovation to establish sustained chain improvement up and down the supply chain. To share in the rewards of improved performance.
8. Production components: design and development of a range of standard components.
9. Lean thinking: eliminate waste in the production process, to increase the value.
10. Sustained performance: continuously adding value and maintaining improved efficiencies.

To achieve these goals, relationships have to last for longer than one project between the Client and his Design Team (if not lead by the Contractor) and then between the Contractor, his designers, subcontractor and suppliers. These again are not part of upholding the bargains made on a particular project.

There is a cultural change necessary for clients who have to be weaned off the cheapest initial price and opt for more collaborative arrangements. Success is being achieved where clients are constructing similar projects over many sites, for instance:

1. Tesco supermarkets have excellent arrangements and continually improving results from using a few selected contractors on a continuous programme.
2. The Highways Agency has developed an “Early Contractor Involvement” scheme and now uses a form of Design and Construct contract on award.
3. Road maintenance contracts are being let on an area basis for several years.
4. McDonald’s “Drive Through Restaurants” are almost entirely prefabricated, reducing site works to a minimum.

There are fewer improvements in the housing sector where préfabrication meets with customer resistance.

The second cultural change is an end to the separation of design and construction. This may sound easy but design professionals are normally contacted first when a potential first time construction employer is seeking advice. The natural instinct for the professional is to want to keep all the design and immediately creates the traditional separation. A feasibility study with fees for a Design and Build Contract is far less lucrative to the professional.

Contractual arrangements which novate the Designer’s contract to the Contractor do not achieve the results sought, although they do reduce the Employer’s risk.

However, there is a reverse flow in some sectors, including public bodies, where there is a growing use of reverse internet auctions, in some cases open to any contractor, subcontractor or supplier that goes against these principles.

Taking the matters that can be applied to single projects there are some initiatives that can apply. Even on single projects there is a growing tendency to have a separate partnering agreement. These are even added to contracts which are fixed price where there is no share in the rewards.

Partnering agreements are of two types which split between parallel “charter” expressing an agreement to co-operate which states that it has no effect on the contractual arrangements. They provide set forums for discussion of contentious issues and do encourage co-operation, which is an obvious benefit and should always have been a priority.

One of the few contracts with a specific contractual partnering option is the NEC Option X12, but even here it states in the introduction:

“The Partnering Option does not include direct remedies between noncontracting Partners to recover losses suffered by one of them caused by a failure of the other. These remedies remain available in each Partner’s own Contract, but their existence will encourage the parties to compromise any differences that arise.”

It remains vital, even when in partnering relationships or any other form of contract, to adhere to the required procedures under the formal contract.

Value Engineering Workshops are becoming more common even on traditional client-designed contracts where the Contractor, his Subcontractors and Suppliers make suggestions that will improve buildability and reduce programme and substitute specifications that can reduce cost.

Lean Construction has had considerable exposure in the technical press, but is not a panacea. The principles were established in manufacturing; construction projects as a whole, despite areas of improvement, are still one of a kind, executed on site (rather than prefabricated in a series of factories) by a temporary organisation (in that the team is assembled for the project).

Much of what proponents claim for lean construction is a restatement of the Egan Principles. The Chartered Institute of Building claims on its website:

“Applied to construction, Lean techniques change the way work is done throughout the different stages of a project. Lean Construction following the objectives of a lean production system (to maximise value and minimise waste) to specific techniques and applies them in a new project delivery process.

The results are:

• better integration between design and construction processes with active role of customers;
• a phase-by-phase structured work to maximise value and to reduce waste at the project delivery interfaces
• performance Management aims at improving total project performance because it is more important than reducing the cost or increasing the speed of any activity.
• “Control” is redefined from “monitoring results” to “making things happen”. The performance of the planning and control systems is measured and improved.

The re...

Table of contents

• Cover Page
• Halftitle Page
• Title Page
• Copyright Page
• Table Of Contents
• INTRODUCTION
• CHAPTER 1 Background
• CHAPTER 2 The Tender
• CHAPTER 3 Starting Up a Project
• CHAPTER 4 Cost Control
• CHAPTER 5 The Management of Subcontracts
• CHAPTER 6 Management of Labour
• CHAPTER 7 Insurance
• CHAPTER 8 Contract
• CHAPTER 9 Claims
• CHAPTER 10 Adjudication
• CHAPTER 11 Design Management and the CDM Regulations
• CHAPTER 12 Quality, Environmental and Safety Management
• COSTS APPENDIX
• SUBCONTRACT APPENDIX
• LABOUR APPENDIX
• CLAIMS APPENDIX
• CONTRACT APPENDIX
• INDEX